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Understanding Self Directed Roth IRA

Self Directed Roth IRA
Self Directed Roth IRA

Planning for a more secured future doesn’t have to be difficult. And while it can be stressful, it is something that will totally be worth it in the end. One of the best ways to save up and achieve financial stability is to set up your own self directed Roth IRA. Now, this is considered to be one of the most beneficial self directed retirement plans out there. But for you to be able to reap its benefits, you have to find out what this type of IRA plan is all about.

What is A Self Directed Roth IRA?

This type of self-directed retirement plan allows the account holder to have the power over deciding how his funds will be allocated. This includes a choice of allowable investment and classes or types of assets. Now, you can turn this into a self directed Roth IRA only if you are qualified to own one.

As for the contribution, it has the same required contribution limit of $5,500 as having a self-directed IRA. They also share the same income requirements, which makes it easier to remember. The great thing about this retirement account is the owner’s ability to invest on several options and use the proceeds as soon as you have reached the age rules.

Different Types of Self-Directed Roth IRA Investments

Now that you have decided to properly set up self directed IRA Roth, you are now open to the possibilities of investing on different types of investment options to further help you save up for your retirement and to keep your finances stable. You can invest on:

  • Money market funds
  • Cash funds
  • Stocks and bonds
  • Mutual funds
  • Real estate investments

    Self Directed Roth IRA
    Self Directed Roth IRA
  • Partnerships
  • Tax liens
  • Business franchises

Prohibited Investments Using Self-Directed Roth IRA

Now, given that there is a wide array of choices when it comes to fund investments, there is a short list of investments that you are not allowed to venture in when using this type of IRA plan. Here are some of the ones that you should completely avoid, based on the regulations set by the IRS:

  • Life insurance contracts
  • S corporations
  • Collectibles such as artwork, jewelry, memorabilia and other material things which can be collected, bought and sold individually or as an entire collection.

With all these in mind, it is not at all difficult for an individual to choose a self directed Roth IRA over other retirement plans.

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